Oftel cries foul in BT discount row

Telecoms watchdog to investigate alleged breach of discount protocol

Oftel is to investigate BT's multi-channel approach to market, after it issued a provisional order on the company for breaking discount protocol.

Oftel has claimed that BT effectively offered a discount to a customer through indirect sales partner RHM. Oftel believes that BT failed to publish the offer, which is contrary to its licence.

Virtual data network service provider Vanco complained to Oftel that BT had undercut it when it was closing a big deal for data network services with IBM.

Vanco had an offer accepted by IBM and BT was told that an alternative supplier had been found. But IBM then reverted to BT after it received an offer through RHM.

"It appears to me that BT has offered a discount scheme to a customer which is not transparent and has not been published, contrary to the conditions of its licence," said David Edmonds, director general of telecommunications at Oftel.

BT has been ordered to either withdraw the arrangement or make it available in full to all other third parties and service providers within three days.

"As this case raises questions about the use of indirect sales channels and the way in which BT offers discounts ... I intend to investigate this broader issue further," said Edmonds.

However, BT said: "BT does not believe Oftel's findings are correct. BT will examine this order carefully and consider its options, but it believes there is no breach."

Oftel rejected BT's arguments, claiming that by introducing RHM to IBM on the ground that it could offer savings, the telco has offered an unpublished discount scheme.

Allen Timpany, chief executive of Vanco, said that market conditions are putting organisations under pressure to perform. "We must look to Oftel to keep the playing field level," he said.